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2015–16 Performance statement

Statement by the Accountable Authority

As the Accountable Authority of the Australian Commission for Law Enforcement Integrity, I present the ACLEI 2015–16 Annual Performance Statement, as required under paragraph 39(1)(a) of the Public Governance, Performance and Accountability Act 2013 (the PGPA Act).

In my opinion, this Performance Statement is based on properly maintained records, accurately reflects ACLEI's performance, and complies with subsection 39(2) of the PGPA Act.

Michael Griffin AM
Integrity Commissioner

Purpose, Outcome and Program

ACLEI's strategic purpose is to make it more difficult for corruption in law enforcement agencies to occur or to remain undetected.

Results against Purpose and Outcome

In 2015–16, ACLEI used five performance criteria to assess the delivery of its Program and progress towards its Outcome.

Having regard to the variables set out in this Statement–including fluctuations in ACLEI's workload, a more complex operating environment, available resources, and intervening factors–ACLEI performed well or strongly against its performance measures in 2015–16.
Some areas identified for improvement or for monitoring are noted under each criterion.

Criterion One–The corruption notification and referral system is effective

1.1 Law enforcement agencies notify ACLEI of corruption issues and related information
in a timely way

1.2 Other agencies or individuals provide information about corruption issues, risks and vulnerabilities to ACLEI

Results against Criterion One

The heads of LEIC Act agencies continue to engage positively with their obligations to notify the Integrity Commissioner of corruption issues, reflecting a strong basis of trust and strategic alignment with ACLEI. A peer review commissioned by ACLEI–the Lacey Review–indicated that all LEIC Act agency leaders considered ACLEI to be an important strategic partner in managing agency risk.

To support awareness-raising efforts, ACLEI officers made a total of 21 presentations to LEIC Act agencies. ACLEI also refreshed its website, adding dedicated pages relating to corruption prevention and integrity framework design.

A higher than expected volume of notifications arose mainly from the newly-extended DIBP jurisdiction (155 out of 191–81% of all notifications), while notifications from other agencies remained relatively stable (See Appendix Four).

Notifications from LEIC Act agencies

2011–12

2012–13

2013–14

2014–15

2015–16

73

56

69

71

191

ACLEI continued to develop its contact network with State police agencies–including through the ACLEI/AFP Sydney Joint Taskforce–to uncover information that might indicate corruption in LEIC Act agencies. The trend over time of this reliable information source indicates increasing awareness of ACLEI's role and partner agency confidence.

Through improving collection of information about corruption risk–part of ACLEI's pivot to developing a proactive capability–a number of own-initiative investigations were commenced.

Own-initiative investigations

2011–12

2012–13

2013–14

2014–15

2015–16

3

2

1

1

6

Area to note

The efficiency of case handling is being improved by the introduction of agreements with agency heads under section 17 of the LEIC Act, to enable agencies to investigate less significant allegations of corrupt conduct themselves, while specifically drawing ACLEI's attention to any matters relating to identified strategic threats. An agreement with the AFP commenced in mid-2016, and one with DIBP is in contemplation.

Criterion Two–ACLEI's investigations are conducted professionally and efficiently, and add value to the integrity system

2.1 Each investigation considers corruption risk and the broader impact on law enforcement

Results against Criterion Two

During 2015–16, a significant workload–both in terms of referrals and notifications received for assessment (230) and in ACLEI investigations commenced (76)–challenged all areas of ACLEI. The increase in investigations reflects a higher quality of information received, additional capacity within ACLEI, and a broadening of ACLEI's jurisdiction.

ACLEI investigations
(including joint investigations)

2011–12

2012–13

2013–14

2014–15

2015–16

Number commenced

9

11

23

42

76

Total active in the year

28

31

45

75

144

Number concluded

7

9

12

7

6

In response to increased workload, the Integrity Commissioner established the Operations Governance Board to help direct the efficient, effective and ethical use of ACLEI's investigation and intelligence resources. Sixteen investigations–relating to serious or systemic corrupt conduct or high-impact corruption issues–were prioritised during the year.

Operational results in the year were positive:

three prosecutions resulted in convictions, while another 10 remain before the courts

two final reports were provided to the Minister (relating to security of sensitive law enforcement information and conflicts of interest), and

more than 100 disseminations of information were made–for example, to provide criminal intelligence, or to enable disciplinary action concerning serious breaches of duty.

Area to note

The 2015–16 peer review survey–while indicating overall confidence in ACLEI–generated comments from some LEIC Act agencies about the need to strengthen management of operational risks associated with notified corruption issues or ACLEI investigations. Noting that the nature of covert anti-corruption investigations means that not all agency concerns can be allayed, ACLEI is re-examining its processes with the aim of strengthening this aspect of its operations.

Results against Criterion Three

Almost half of the 275 corruption issues under investigation in 2015–16 were conducted as internal investigations by LEIC Act agencies, which–unless reconsidered and discontinued with the agreement of ACLEI–will result in a 'section 66' report to the Integrity Commissioner.

Since the bulk of internal investigations in 2015–16 were undertaken by the AFP (56) and DIBP (72), the progress of investigations was discussed at monthly meetings between each of those agencies and ACLEI. This engagement provides a mechanism for agencies to apprise ACLEI of any factors that may impede or delay an internal investigation, or of any evidence suggesting that the Integrity Commissioner's independence or statutory powers may be of value.

ACLEI reviewed 14 'section 66' investigation reports from LEIC Act agencies during the year and found no cause to comment on the process or outcome. A further 29 reports were received, with reviews to be concluded in 2016–17.

Area to note

ACLEI expects that the number of corruption issues dealt with through internal investigation will increase in coming years, due to the introduction of section 17 agreements, which clarify what issues should be sent to ACLEI as 'significant' corruption issues and those that are not 'significant' and which would default to internal investigation (unless the Integrity Commissioner determines otherwise). ACLEI also expects the stock (gross number) of internal investigations to increase, as agencies strengthen their detection methods through, for example, organisational suitability assessments. Such changes will increase the importance of ACLEI's case liaison and review functions.

Criterion Four–ACLEI insights contribute to accountability and anti-corruption policy development

4.1 When warranted, the Integrity Commissioner makes recommendations for improvement in corruption prevention or detection measures

4.2 Submissions that relate to corruption prevention or enhancing integrity arrangements are made to government or in other relevant forums

4.3 Targeted presentations about integrity are made to diverse audiences

4.4 The Integrity Commissioner's Annual Report or other publications contain analysis of patterns and trends in law enforcement corruption

Results against Criterion Four

During the reporting period, the Integrity Commissioner engaged with LEIC Act agency heads to outline specific corruption vulnerabilities observed in operations, and how they may be addressed. ACLEI also provided significant input to a taskforce that is examining modifications to security vetting procedures, to strengthen Australian Government agencies against malicious insider threat.

ACLEI made three public submissions to Commonwealth or State Government Parliamentary inquiries and provided policy comments to several other government initiatives relating to the control of corruption risk–for example in the areas of information sharing, whistleblower arrangements, fraud control, corruption risk at the border, organised crime, and the risk of criminal infiltration of government agencies. Of particular note, ACLEI disseminated information to inform the ACC's analyses of organised crime threats, including the Organised Crime Threat Assessment 2016 and The costs of serious and organised crime in Australia 2013–14.

In 2015–16, ACLEI published a series of corruption prevention pages on its website. These pages consolidate the anti-corruption insights accumulated by ACLEI over several years, making them available to a wide audience. The webpages include a series of key concepts, a corruption prevention toolkit, and case studies drawn from the Integrity Commissioner's investigations. ACLEI case studies were cited in five State, Commonwealth or international corruption-related publications or presentations.

The Integrity Commissioner or senior ACLEI staff made ten presentations to nine domestic and international audiences during the year–including to the Serious and Organised Crime Coordination Committee, a meeting of the ACC examiners, and the Australian Public Service Commission (see Appendix Three). These presentations focused on corruption-enabled border crime, integrity leadership and culture, integrity as an organisational asset and integrity capacity building. The Integrity Commissioner's presentation to the 2015 Australian Public Sector Anti-Corruption Conference Integrity leadership: countering corruption impulses in difficult environments was published on the ACLEI website.

A patterns and trends analysis is on pages 20 to 22 of this report.

Area to note

The 2015–16 peer review indicated that LEIC Act agencies would find significant benefit if ACLEI were able to strengthen its strategic intelligence contribution, to identify more information about emerging threats, methods and systemic vulnerabilities. ACLEI's response–contained in the 2016–17 Corporate Plan–is to devote additional resources to this area of work, to better leverage existing work in ACLEI and with other agencies. ACLEI's growing dissemination program will also contribute to this outcome.

Criterion Five–ACLEI's governance and risk management controls are effective and take account of its operational role

5.1 Systems are in place to ensure ACLEI officers act ethically, comply with legislative requirements and adhere to standards set by the Integrity Commissioner

Results against Criterion Five

The Internal Governance Board receives monthly reports on risk, governance and integrity. The Assistant Director Professional Standards–who also performs the functions of Agency Security Adviser–receives and assesses declarations made under ACLEI's integrity policy, maintains ACLEI's information security processes, and conducts internal audits of information-handling and access to external databases. No material breaches arose in the year. One concern was investigated independently, finding no improper conduct (see Appendix Five).

Overseen by ACLEI's Audit Committee, internal audits in 2015–16 focused on risks associated with ACLEI's rapid expansion, fraud and corruption controls, compliance with legislation, and financial systems integrity. Overall, these audits found that ACLEI's risk management systems and governance practices were appropriate to its functions.

Building on the 2014–15 internal audit of anti-corruption controls, the Integrity Commissioner commissioned an independent assessment of the health of ACLEI's integrity culture in late 2015. The reviewers reported that "Integrity is demonstrated throughout the agency and leadership is committed to ethical practices. Employees are comfortable reporting unethical behaviour and believe that quality of work is encouraged".

ACLEI's governance framework was further strengthened in 2015–16 by the establishment of the Operations Governance Board–comprising the Integrity Commissioner and Executive Director Operations, and advised by the General Counsel, Agency Security Adviser and Operations Branch Directors–to direct the efficient, effective, economical and ethical use of ACLEI's investigation and intelligence resources, having regard to risk.

Several of ACLEI's standard operating procedures and agency policy advices were refreshed during the year to take account of changes in the environment or new legislation. Policies suitable for publication are on ACLEI's website.

Area to note

A governance challenge continuing into 2016–17 is to manage the effects of rapid growth across ACLEI's Canberra and Sydney sites, having regard to maintaining common professional standards and a shared integrity culture. The concurrent management of a
high-volume/high-risk workload may aggravate the difficulty of maintaining appropriate systems of control.

Financial resources

Operating result

Resources increased in 2015–16, continuing a long-term trend which mirrors growth in ACLEI's responsibilities and jurisdiction.

Trends in resources

2011–12

2012–13

2013–14

2014–15

2015–16

Total resources ($'000)

5,150

7,711

8,384

9,685

11,702*

Operating result–surplus/(deficit)

(427)

269

776

1,276

1,025

Budgeted staffing

24

29

36

38

52

Actual staffing (annualised average)

24

28.3

25.2

30.6

38.7

Actual staffing (end of year)

26

26

25

29

40

* In 2015–16, departmental appropriations of $0.411m were quarantined and/or withheld (section 51 of the PGPA Act) in accordance with a decision of Government.

ACLEI recorded an operating surplus of $1.025 million (or 9% of budget), primarily due to lower employee expenses for 2015–16. This variation followed ACLEI's use of a staged growth strategy to manage integrity risk during its recent expansion (see Jurisdiction and staffing). This situation will rectify in 2016–17, as ACLEI concludes further recruitment activity.

Other resources are also available to ACLEI. For instance, ACLEI's Sydney staff work from secure AFP premises, where a number of joint operations are conducted in a taskforce arrangement. The accommodation arrangement–which nominally expires on 30 June 2017–is a notional saving to ACLEI of $0.168 million.

ACLEI's audited 2015–16 Financial Statements appear in Part Three of this Annual Report. Appendix One comprises additional financial tables which summarise the total resources available to ACLEI during the year, and the net cost of ACLEI's Outcome and Program.

Efficiency measures

The deployment of staff to operational tasks–ACLEI's main discretionary asset–is supervised by the Executive Director Operations, on advice from Directors who manage these resources on a daily basis. An Operations Governance Board was established during the reporting period to review the efficient, effective, economical and ethical use of resources each month.

With a higher staffing level–as well as an increase in variable costs, such as travel costs and other complexities associated with a more dynamic operating environment–ACLEI is moving towards cost-centre reporting in 2017, to further strengthen its financial reporting framework.

ACLEI has various arrangements with other agencies to offset part of the cost of services provided to support LEIC Act investigations. These arrangements help to minimise cost and management overheads, and deliver efficient distribution of high cost resources through shared service arrangements. In 2015–16, ACLEI provided:

$1.426 million to the ACC for physical surveillance support and related services

$0.383 million to the AFP for technical support for operations, and

$0.325 million to the AFP for the offset of costs associated with two joint operations (relating to corruption-enabled border crime).

ACLEI also sources various corporate services from external suppliers or partners–such as ICT services, records management and payroll–to ensure the efficient and economical use of resources. For travel and related services, ACLEI uses whole-of-government purchasing arrangements. Online self-service products are also increasingly being used within ACLEI–such as for credit card acquittal–to minimise administrative burden.

Factors affecting delivery

Four main factors affected ACLEI's capacity to deliver outcomes during the year–namely, the expansion of its jurisdiction (bringing increased case load and relationship management challenges), appointing and integrating a 30% increase in staff, dealing with a greater number of high-risk investigations, and undertaking the fit-out of a new Canberra headquarters. A fifth factor–ACLEI's strategic pivot towards being more proactive in its identification and dissemination of information that indicates corruption–involved internal adjustments to be accommodated within an already busy schedule of work.

While the aggregation of these events in 2015–16 presented management challenges for an agency of ACLEI's size, key projects were progressed and important work was completed to a high standard. Some residual work that was deferred to 2016–17 is expected to be dealt with in the course of that year–for instance by the commencement of special projects to clear backlogs or enhance systems.

Jurisdiction and staffing

The Customs and Other Legislation Amendment (Australian Border Force) Act 2015–which received Royal Assent on 20 May 2015–brought the DIBP into the Integrity Commissioner's jurisdiction on a whole-of-agency basis from 1 July 2015. In 2015–16, 81% of all notifications and 51% of all referrals related to DIBP, while investigations relating to DIBP made up 43% of ACLEI's own operational workload. Accordingly, integrating DIBP into the integrity partnership and managing the associated workload were priority activities across all areas of ACLEI during the reporting year.

To assist ACLEI to deal with this extension of jurisdiction, the Government added $3.1 million to ACLEI's annual resourcing from 2015–16 as part of the National Security–strengthen and enhance Australia's border protection services–further measures Budget initiative. The resulting recruitment program was staged throughout the year to ensure high-quality candidates were appointed without negatively affecting agency culture. With a new maximum cap of 52 ASL, ACLEI's staff grew by a third over the year–from a starting point of 29 staff to a net of 40 ongoing or temporary employees, plus other casual or intermittent staff–with a quarter of ACLEI's staff now based in the ACLEI/AFP Sydney Joint Taskforce. Other recruitment processes were in progress at the close of the year which, subject to successful completion of security clearance processes, will bring ACLEI closer to its maximum establishment.

An implementation review of the DIBP jurisdiction–including the accommodation arrangements for the Sydney Joint Taskforce (presently provided by the AFP)–is scheduled for the latter part of 2016, to inform the 2017–18 Budget.

Operational tempo

Corruption issues associated with the improper movement of licit and illicit goods across the border–many indicating improper relationships with criminal entities–remain ACLEI's main workload. Of the 144 corruption issues subject to investigation by ACLEI during the year, 16 investigations received priority attention.

The resolution phases of major investigations–for instance, ACLEI Operation Swan, which in the reporting period resulted in the arrest of two Agriculture Department officials and one civilian, and the subsequent restraint of approximately $1 million (alleged to be the proceeds of crime)–typically involve a great degree of coordination across all ACLEI's operational, corporate and policy areas, as well as additional resources provided by State police and the AFP. While they last, these periods of intense focus significantly affect ACLEI's ability to progress other work. To a lesser extent, they also involve the commitment of future resources–potentially spanning several years–for important value-adding, such as for prosecutions and related legal actions, post-charge hearings, disseminations of intelligence and analyses, and preparation of reports.

Relocation of Canberra headquarters

The expiration of the lease on ACLEI's original premises in Canberra afforded the opportunity to reduce leasing costs, accommodate all ACT-based personnel on a single floor, and better manage the risk of physical harm to ACLEI's staff. The fit-out–delivered on time in July 2016, to a high standard and below budget–was managed by the ACLEI Corporate Section during an already busy period. Other important corporate projects (which included a high recruitment workload, the final transition to PGPA Act systems, and a strengthening of internal security measures) were also delivered during this time.

The timing of the relocation involved operating from temporary secure accommodation for two months while the new premises were completed. This situation caused some minor disruption–
for instance, in finalising some 'section 66' reports (due to inaccessibility of files).

A more proactive ACLEI

As noted in previous Annual Reports, the evidence available to ACLEI indicates an ongoing shift in corruption risk relating to agencies that operate in the border regulation and law enforcement environment–driven by the opportunities and rewards for corrupt conduct. During 2015–16, ACLEI started to reposition the use of its resources to identify new leads, and to generate a broader range of more useful products. This pivot–towards a more proactive ACLEI–will continue over the next two years in at least two ways.

First, ACLEI's strategy of sensitising other agencies–particularly State policing agencies–to the likelihood that their criminal intelligence records and investigations hold insights about the possible compromise of high-risk Commonwealth law enforcement activites, is bringing new information to light. ACLEI is now devoting additional resources to obtaining this important information (especially in the strategy's initial phases while cooperative relationships become normalised), and in following up the leads generated. The longer-term benefit is that information pathways will be established that will uncover information about deeply-concealed corruption.

Secondly, ACLEI will look for better articulation and alignment between its strategic intelligence, investigations and policy programs. It is envisaged that this pivot will result in ACLEI providing more regular assessments of vulnerabilities seen in border operating environments. The longer-term benefit will be to harden corruption targets, inform
risk-based decisions relating to border-crime counter-measures, and bring greater efficiency and effectiveness to the collection of intelligence about the indications of corruption. ACLEI expects to further increase disseminations in support of this program.

These realignments, reprioritisation and reallocation of resources will include an inevitable phase of adjustment, both internally and with external partners.